One of Hong Kong's largest cosmetics retailers, Sa Sa International, has announced plans to close up to 25 percent of its stores in the city over the next 18 months. The company reasoned that the closures are necessary given the current state of the business environment.
According to its stock exchange filing, Sa Sa International is already in the process of selecting 20 to 25 percent of its Hong Kong outlets for closure, effectively culling its least performing stores. The company also stated that it is considering requesting some of its employees to take a no-pay leave as part of its attempt to reduce its operating costs.
Among the stores that will likely be closed are those located in popular tourist areas, which were heavily affected by the city's recent domestic unrest. The company explained in a statement that the "unabated difficult operating environment" in the city, it has now been forced to adopt necessary cost control measures.
Apart from closing a quarter of its physical stores, Sa Sa International also revealed that it is actively negotiating with landlords and building owners for possible rental reductions, which it says should help its restore profitability much quicker.
In its third-quarter ending on December 31, 2019, Sa Sa International had only closed a total of six stores in Hong Kong. This was during a time when retail sales in the city had plummeted by more than 35.2 percent year-on-year. For its latest quarter ending in March, the company revealed that it would be closing no less than 19 stores. This will then be followed by the closure of up to six other stores in the coming quarters.
While it shuts down its store in Hong Kong, Sa Sa revealed that it would be also focusing on expanding its retail network in Mainland China. This will include massive optimization of its e-commerce business and enhancing its existing mainland store performance.
Sa Sa International is one of a number of Hong Kong retailers that have been heavily affected by the seven months of domestic turmoil. The city's retail sector had reported its worst figures on record, with most being forced to either close to implementing more drastic measures. This week, Hong Kong retail chain operator Chow Tai Fook also announced plans to reduce its number of outlets in the city.
According to the Hong Kong Retail Management Association, more than 7,000 companies have closed or are expected to close in the coming months. Meanwhile, around 5,600 jobs have been directly affected.
